Missing Links in the Inclusive Growth Debate: Functional Income Distribution and Labor Market Institutions

AbstractIn this paper I analyze changes in the wage distribution in the Netherlands. I use a matched employer-employee dataset that covers the population of employees. Wage inequality increases over the period of 2001–2016. Changes in between-firm wage components are responsible for nearly the entire increase. Increases in the variance of workers’ skills and increases in worker sorting and worker segregation explain the majority of the rise in the variance of wages. These changes are accompanied by a pattern where variation in educational degree and firm average wages become more correlated over time. Finally, it is suggested that labor market institutions in the Netherlands play an important role in mediating overall wage inequality.

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Labor Market Institutions and Wage and Inflation Dynamics

Economic Analysis and Policy ◽

10.1016/s0313-5926(10)50038-9 ◽

2010 ◽

Vol 40 (3) ◽

pp. 393-410 ◽

Cited By ~ 6

Author(s):

Fatih Macit

Keyword(s):

Labor Market ◽

Labor Market Institutions ◽

Market Institutions ◽

Inflation Dynamics

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Impacts of Labor Market Institutions and Demographic Factors on Labor Markets in Latin America

IMF Working Papers ◽

10.5089/9781484393840.001 ◽

2019 ◽

Vol 19 (155) ◽

Cited By ~ 1

Author(s):

Adriana Kugler

Keyword(s):

Labor Market ◽

Latin American ◽

Older Workers ◽

Market Performance ◽

Demographic Factors ◽

Employment Protection ◽

Labor Market Institutions ◽

Market Institutions ◽

Payroll Taxes ◽

The Impact

This paper documents recent labor market performance in the Latin American region. The paper shows that unemployment, informality, and inequality have been falling over the past two decades, though still remain high. By contrast, productivity has remained stubbornly low. The paper, then, turns to the potential impacts of various labor market institutions, including employment protection legislation (EPL), minimum wages (MW), payroll taxes, unemployment insurance (UI) and collective bargaining, as well as the impacts of demographic changes on labor market performance. The paper relies on evidence from carefully conducted studies based on micro-data for countries in the region and for other countries with similar income levels to draw conclusions on the impact of labor market institutions and demographic factors on unemployment, informality, inequality and productivity. The decreases in unemployment and informality can be partly explained by the reduced strictness of EPL and payroll taxes, but also by the increased shares of more educated and older workers. By contrast, the fall in inequality starting in 2002 can be explained by a combination of binding MW throughout most of the region and, to a lesser extent, by the introduction of UI systems in some countries and the role of unions in countries with moderate unionization rates. Falling inequality can also be explained by the fall in the returns to skill associated with increased share of more educated and older workers.

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